Service

Service at GF

For more than two centuries, customers trust the high quality and
reliability of GF’s products and services. With worldwide production
locations, customer proximity and performance are ensured around the
globe. The decentralized research and development centers in the major
markets allow GF to better understand customer needs and quickly act
upon them.

Service

All about GF

Our Profile //

GF comprises three divisions: GF Piping Systems, GF Automotive, and
GF Machining Solutions. Founded in 1802, the Corporation is
headquartered in Switzerland and is present in 31 countries with 126
companies, 47 of them production facilities. Its approximately 14 100
employees generated sales of CHF 3.80 billion in 2014. GF is the
preferred partner of its customers for the safe transport of liquids
and gases, lightweight casting components in vehicles, and
high-precision manufacturing technologies.

GF Piping Systems

GF Piping Systems is a leading supplier of piping systems made of
plastics and metal. The division focuses on system solutions and
high-quality components for the safe transport of water and gas in
industry, utilities, and building technology. Its product line
includes fittings, valves, pipes, automation and jointing technology
and covers all water cycle applications.

GF Piping Systems supports its customers in over 100 countries
through its own sales companies and representatives. The division is
present in Europe, Asia and the Americas with more than 30
manufacturing sites and research and development centers, which also
support energy-saving use of raw materials and resources.

Key figures GF Piping Systems

million CHF

2014

2013

Sales

1 476

1 402

EBIT

142

141

Return on sales (EBIT margin) %

9.6

10.1

Invested capital (IC)

685

621

Return on invested capital (ROIC) %

17.1

18.7

Employees at year-end

6 086

6 095

GF Automotive

GF Automotive is a technologically pioneering development partner and
manufacturer of lightweight cast components and systems made of
ductile iron, aluminum and magnesium for the global automotive
industry as well as a variety of industrial applications. The highly
complex lightweight components contribute to making modern vehicles
lighter and reducing the CO2 emissions.

GF Automotive manufactures at 9 production plants in Germany,
Austria, and China. In those countries as well as in Switzerland,
Korea and Japan it operates sales offices. The lightweight research
and development competency is in Schaffhausen (Switzerland) and Suzhou (China).

Key figures GF Automotive

million CHF

2014

213

Sales

1 415

1 1498

EBIT

93

70

Return on sales (EBIT margin) %

6.6

4.7

Invested capital (IC)

393

384

Return on invested capital (ROIC) %

21.8

16.1

Employees at year-end

4 898

4
947

GF Machining Solutions

GF Machining Solutions’ electrical discharge, high-speed milling and
laser texturing machines, along with automation solutions, make it the
world’s leading provider to the tool and mold making industry and to
manufacturers of precision components. Most important customer
segments are information and communication technology, aerospace, and
the automotive industry.

The division has its own sales companies in more than 50 countries
and production plants in Switzerland, Sweden, and China. GF Machining
Solutions operates research and development centers in Meyrin, Losone,
and Nidau (Switzer- land), Vällingby (Sweden), Beijing, and
Changzhou (China).

Key figures GF Machining Solutions

million CHF

2014

2013

Sales

905

867

EBIT

53

51

Return on sales (EBIT margin) %

5.9

5.9

Invested capital (IC)

302

274

Return on invested capital (ROIC) %

16.9

15.2

Employees at year-end

3 008

2
873

Service

Review

Market proximity

Being close to the market is crucial to develop the
best solutions for customers. GF has 38 Centers of Competence (CoCs)
around the globe. Extensive training centers and large product
demonstration areas provide customers with tailor-made services and
personal support worldwide.

Centers of Competence

Network of competence //

GF Piping Systems operates eight CoCs in Europe, three in the
Americas and six in Asia. Eleven CoCs of GF Machining Solutions are
located in Europe, three in the Americas and seven in Asia. Five of
them were newly opened in 2014:

Asia //

Exhibition area at GF Machining Solutions’ new CoC in Shanghai.

GF Machining Solutions opened a new CoC in Shanghai (China). It
focuses on customers in the automotive and electronic component
industries and offers comprehensive support in reaching efficiency and
sustainability targets.

Europe //

The new CoCs near Milan (Italy), Paris (France) and Brno (Czech
Republic) allow GF Machining Solutions to be closer to the local
markets. Customers benefit from extensive technological expertise and
on-the-spot support.

USA //

Guests at the opening of the new CoC in Irvine admire the saltwater aquarium with GF pipes.

GF Piping Systems and GF Machining Solutions opened a joint CoC in
Irvine (California), to further strengthen customer services at the
West Coast. Both divisions provide their customers with individual
support in maximizing the profitability of operations.

All Centers of Competence collaborate and exchange their expertise to
expand the knowledge base across international borders. In future, GF
will further extend its global network of competence to be represented
wherever its customers are. This allows the Corporation to respond
quickly to local market needs and to develop the very best solutions
for its customers.

Highlights GF Piping Systems

International experts at the Water Technology Summit.

Successful premiere // At the GF Water Technology Summit in
Schlatt (Switzerland) in September, 50 international experts addressed
key water challenges with regard to desalination and mobile water
treatment. In future, GF Piping Systems will hold the summit annually.

Best supply chain // GF Piping Systems won the
Supply Chain Management Award at the international Supply Chain
Convention in Frankfurt (Germany) in June. The division’s integrated
end-to-end supply chain solution was singled out as the best which
enables the development of innovative services.

Highlights GF Automotive

The Helios Award 2014 for energy efficiency went to GF Automotive.

Sustainable production // In July, GF Automotive won the
Helios Award given by the Economic Chamber of Lower Austria for
performance in terms of energy efficiency. The modernization of the
division’s production sites in Herzogenburg (Austria) saves 2.5
million kWh of energy and 650 tons of CO2 per year.

New partnership // GF Automotive announced the
financial participation in the German Meco Eckel GmbH in July. The
strategic and financial partnership with the leading specialist in
mold-making enables not only faster design-to-production processes
but also enhanced offerings and seamless supply and service.

Highlights GF Machining Solutions

Machine of Liechti Engineering AG producing blisks.

Promising aerospace // Since July, Liechti Engineering AG,
Langnau (Switzerland), is part of GF Machining Solutions. The
acquisition allows GF to expand its presence in the aerospace sector.
Liechti is the worldwide market leader for 5-axis milling machines for
aircraft engines and power generating turbines.

Golden Micron // GF Machining Solutions’ Integrated
Vision Unit (IVU Advance) won the Micron d’Or Award last September
at the Micronora in Besançon (France). The IVU Advance provides
precision up to the micron.

Service

Success stories

Letter to the Shareholders

GF keeps its earnings growth path

GF generated sales of CHF 3 795
million in 2014 for an increase of 1%. The operating
profit (EBIT) rose 9% to CHF 274 million mainly thanks to
significant productivity gains.

The EBIT margin went up from
6.7% to 7.2% and the return on invested capital (ROIC)
from 16.7% to 17.9%. All three divisions generated ROICs
well above their cost of capital.

Free cash flow before
acquisitions and divestments stood at CHF 110 million
compared to CHF 174 million in 2013 mainly on account of
higher investments in fixed assets, especially at GF
Automotive. Furthermore, the high turnover in December led to
a clear increase of the net working capital at year-end
compared to 2013.

The number of employees rose
slightly from 14 066 to 14 140. The increase due the
acquisition of Meco Eckel (Germany) and Liechti
Engineering (Switzerland) has been nearly offset by the
divestment of the gravity-die-casting operations in
Herzogenburg (Austria).

Net profit grew 34% to CHF 195
million and earnings per share 32% to CHF 45 also
supported by the disposal of non-operative real estate. The
Board of Directors will propose a dividend of CHF 17 (CHF 16 for
2013) at the Annual Shareholders’ Meeting.

Strategy implementation well under way //

For the first time ever, GF Piping Systems became the largest
division of GF, a change which continues to reduce the corporation’s
overall exposure to economic cycles and increases its overall profitability.

GF Automotive has
divested its non-core activities and significantly
improved its position in the pressure die-casting sector by
entering in July into a strategic partnership, including a
majority stake, with Meco Eckel, a leading German manufacturer
of pressure die-casting molds.

GF Machining Solutions
is now well focused on less cyclical, more profitable
market segments such as the promising electronics and
aerospace sectors. In the latter, it became a leading actor in
2014 by acquiring Liechti Engineering AG, the specialist of
5-axis milling machines for the production of the key rotating
components of aircraft engines and power generating
turbines.

Yves Serra, President and CEO, and Andreas Koopmann, Chairman of the Board of Directors, standing in front of the new production machine for large fittings in Schaffhausen.

All three divisions increased their operating results, GF Automotive the most

GF Piping Systems

GF Piping Systems grew its top line by 5% to CHF 1 476 million.
Organic growth reached 3% mainly on account of strong sales in the US
gas sector as well as in Building Technology in Europe and
shipbuilding worldwide. The general demand in Europe but also in
sectors like semi- conductor plants remained however subdued.

The operating result went up to
CHF 142 million (from CHF 141 million in 2013).
Profitability in the core business remained at a high
level but the new acquisition in Turkey was affected by the
strong depreciation of the Turkish Lira, at least during the
first half-year.

Measures have been taken at GF
Hakan Plastik which led to a 35% increase in sales and
in the fourth quarter to a much higher profitability.

GF Automotive

GF Automotive saw its turnover decrease by 6% to CHF 1 415 million in
January on account of the divestment of its gravity die-casting
operations in Herzogenburg (Austria) but also because the basic metal
price decreases were passed on to customers. The truck-related demand
became rather slack during the second half-year. On the other hand,
the demand related to passenger cars remained at a good level in 2014,
and attractive orders have been obtained, especially at premium manufacturers.

The operating result
jumped 33% from CHF 70 million to CHF 93 million as
non-core, low performing businesses have been divested and
the average contract margins improved. In addition, its new
acquisition Meco Eckel contributed very positively to the
overall result.

The ROS went
significantly up from 4.7% to 6.6% and the ROIC from
16.1% to 21.8%. The extension of the iron casting plant
of Kunshan (China) has been completed on time in October
2014 for a capacity increase of 50%.

GF Machining Solutions

GF Machining Solutions increased its turnover by 4% to CHF 905
million. The Liechti acquisition added CHF 32 million. The organic
growth stood at 2%. After a rather slow start, orders picked up in the
second half- year, especially in the electronics and aerospace
sectors, for an increase of 9% compared to 2013 out of which 3%
attributed to Liechti who obtained a major order in the amount of CHF
28 million at a well-known aircraft engine manufacturer. The backlog
of the division went up 45%, certainly a good sign for 2015.

The operating result
reached CHF 53 million against CHF 51 million in 2013,
the Liechti contribution being compensated by margin
reductions in countries like Japan, owing to the Yen
depreciation.

Outlook for 2015 //

Whilst the profitability of GF Automotive is not affected as all
activities are located outside of Switzerland, the sharp appreciation
of the Swiss Franc in January would have, if present levels persist,
an impact on GF Machining Solutions and GF Piping Systems. However,
this impact is clearly reduced as the Euro is basically naturally
hedged and financial hedges cover most of the net exposure in US
Dollar for 2015.

Moreover, efficiency measures
have been taken in Switzerland, purchasing in Euro has been
further increased and relevant innovations have been introduced
in all three divisions in order to maximize revenues and margins.

Finally, lower raw materials
costs will have a positive impact on GF Piping
Systems, production capacity in China at GF Automotive has
been greatly increased and the order backlog at GF Machining
Solutions is much higher than a year ago.

Forecasting has certainly become
more challenging on account of the uncertainties regarding
the level of the Swiss currency. Nevertheless, based on
today’s knowledge and the measures we have taken, we expect to
further increase our operating margin (ROS) to the 8% range
whilst keeping our ROIC between 16% and 20%.

Personnel changes at the Board of Directors //

Upon reaching the retirement age for Board members, the term of
office of Kurt E. Stirnemann ended at the Annual Shareholders’ Meeting
of March 2014.

Kurt E. Stirnemann can
look back to a successful career in the service of the
company, first as President of GF AgieCharmilles as of 1996,
then as CEO and Delegate of the Board of Directors of GF from
2003 to 2008 and as member of the Board from 2003 to 2014. The
Board of Directors and the Executive Committee warmly thank Kurt
E. Stirnemann for his long-time commitment to the company. We
wish him all the best for the future.

Hubert Achermann,
Swiss citizen, was elected to the GF Board at the
Annual Shareholders’ Meeting 2014. Hubert Achermann is
attorney at-law and held various key positions at KPMG, of
which eight years as CEO. He is a member of a number of
company boards and cultural trusts.

Amendments of the Articles of Association //

According to the new Corporate Governance directives and the
associated adaptions of the compensation, the Board of Directors will
propose at the Annual Shareholders’ Meeting of March 2015 a revision
of the Articles of Association.

All together at the service of our customers //

We highly value the constructive feedback and the close cooperation
we enjoy with our customers. Our before and after sales services stand
at the heart of our constant efforts to keep in touch with them, adapt
our offering and quicken our innovation pace.

We express our
heartfelt gratitude to our shareholders for their
continuing trust. Our deepest thanks go to our employees.
Their willingness to act as a team, their dedication,
flexibility and tremendous commitment to GF make outstanding
achievements possible.

Andreas Koopmann Chairman of the Board of Directors

Yves Serra President and CEO

Service

Corporate Report 2014

The GF Executive Committee in front of the new production machine for fittings with big dimensions at the GF Piping Systems plant in Schaffhausen (left to right): Pascal Boillat, Pietro Lori, Yves Serra (CEO), Roland Abt and Josef Edbauer.

Topics of the Corporate Report

Service

“Today’s services bring the orders of tomorrow”

Is GF a service company?

Yves Serra: Yes. All three divisions of GF are selling
solutions, not only products. Services are essential to our
solutions offering, before and after sales are concluded. In fact,
they often play a decisive role to convince customers and certainly
to retain them. Today’s services bring tomorrow’s orders.

What does service mean for GF Piping Systems?

At first glance, service in this sector consists in the
availability of all components and products wherever our customers
need them. This we ensure by maintaining a proper stock in each region
or each country. In fact, GF Piping Systems offers much more than
that. GF Piping Systems has developed the most comprehensive handbook
regarding the use of plastic piping systems for virtually any
industrial application, a reference which is used by our customers to
select, joint, and inspect every kind of plastic piping systems. Our
skilled engineers provide technical support during the design phase as
well as by selecting the right piping materials for aggressive media.
We also train every year more than 10 000 customers worldwide to
ensure a proper layout and installation. GF Piping Systems is present
in virtually all sites where construction happens.

And for GF Automotive?

GF Automotive is specialized on offering lightweight
solutions to its customers, the car and truck manufacturers. The
division acts as a partner, developing its own materials and
component designs in close contact with its customers. Its test
centers can handle the largest car and truck components, even whole
vehicles. Thanks to its extensive production facilities in Europe
and China and production partners in the US and Japan, it offers to
international car customers the same solutions worldwide. In
addition, the division develops and builds its own molds and
patterns and undertakes their maintenance including at our
customers’ premises, 24 hours a day.

Yves Serra, President and CEO

“Services are essential to our solutions offering, before and after sales are concluded.”

GF Machining Solutions is a machine tool business. Can service be described as the delivery of spare parts?

Not only. Service starts with advising of our customers
regarding their projects. For example the development of automated
solutions, typically tailored to each client’s needs. GF Machining
Solutions also offers in each and every one of its worldwide
facilities the necessary test cuts to prove the validity of its
offering. The exclusive training of customers’ operators upon
delivery and the availability of application engineers plays
thereafter a key role to maximize the efficiency and utilization of
the proposed solutions. Finally, GF Machining Solutions ensures a
prompt delivery of components and parts close to its customers and a
whole array of preventive maintenance contracts for each and every
one of its clients. All the above account for 30% of the turnover of
GF Machining Solutions.

Where do you see opportunities for the service business of GF Piping Systems?

GF Piping Systems recently developed geolocalisation tools
and services to enable customers to trace the location of the
components they install, a real novelty in this business. We also
see opportunities in the offering of novel plastic weld inspection
technologies but also in innovations regarding leak detection across
plastic pipe networks.

Will service be more relevant for GF Automotive in the future?

With the development of electric cars or even the strict
application of CO2 reduction targets, the expertise of GF
Automotive in lightweight component construction will certainly be an
asset regarding the competitiveness of its offering. Also, the
upstream support of our customers at the R&D and component design
stage will become even more relevant. For example for aluminum
die-casting components we also offer the relevant molds, an essential
part of their design.

Can you describe how GF Machining Solutions can expand its service business?

With internet chips inside the machine controls, remote
services will certainly be expanded, just like the services offered
in cars. They include for example software additions and advanced diagnostics.

How can GF benefit from a further enhancement of its service business?

Service activities are less cyclical, especially in the
machine-tool business. They are an important and growing source of
revenues. Services offered worldwide are also a key differentiator,
especially for our international customers in the car, aerospace or
electronics sectors, for example. Finally, services bring us closer to
our customers, to their needs and allow us to quickly adapt our
offering, in other words to quicken our innovation pace.

Service

Each customer can count on us

This team from the Competence Center in Irvine (USA) is exemplary for
all 14 140 employees of GF who put their heart and soul into their
work. Thanks to the personal dedication and passion of each of them,
GF delivers exceptional products and services to customers worldwide.

GF Piping Systems

GF Automotive

GF Machining Solutions

Service

Organization of GF

Georg Fischer Ltd, the Holding Company of the GF Corporation, is
organized under Swiss law, headquartered in Schaffhausen
(Switzerland), and listed on the SIX Swiss Exchange.

Board of Directors //

The ten members of the Board of Directors, elected individually by
the Shareholders’ Meeting, are responsible for determining the
Corporation’s strategic direction, the design of accounting, the
financial controlling and financial planning. It appoints the
Executive Committee and has ultimate responsibility for supervising
and monitoring the management of Georg Fischer Ltd. All members of the
Board of Directors are non-executive.

A shared corporate culture is becoming increasingly important with the spread of globalization.

Executive Committee //

The Chief Executive Officer is responsible for the management of the
Corporation. Under his leadership, the Executive Committee addresses
all issues of relevance to the Corporation, takes decisions within its
remit and submits proposals to the Board of Directors. The Heads of
the Divisions and the Corporate Staff Units are responsible for
drafting and achieving their business objectives and for managing
their units autonomously.

Corporate structure //

GF Corporation is organized in the three divisions GF Piping Systems,
GF Automotive and GF Machining Solutions and the two Corporate Staff
Units Finance & Controlling and Corporate Development. The Heads
of the Divisions and the Corporate Staff Units are responsible for
managing their businesses and for achieving their business
objectives.

Corporate Center //

The CEO and the CFO form the Corporate Center in the narrower sense.
The Corporate Center is closely involved in management, planning, IT,
communications, finance, management development, and corporate culture
and is supported in these tasks by a team of about 50 people. The
Corporate Center ensures that risk management, transparency, corporate
governance, sustainability, and compliance practices meet the
requirements of the owners and the public, and it supports the Board
of Directors in meeting its responsibilies.

Finances //

Corporate Finance & Controlling uses powerful information systems
to ensure the time-critical financial management of the Corporation. A
standardized system of financial reporting is used throughout the
entire Corporation, guaranteeing immediate and complete transparency.
Currency, interest-rate, and credit risks are monitored and managed at
Corporation level.

Management development //

Strategically important competencies and information are shared and
made available throughout the Corporation. Considerable importance is
attached to internal training and to the focused nurturing and
development of leaders and managers.

Communication //

Thanks to the long history and the consistent enhancements, the
Corporation has a strong brand with GF. In 2013, the company has
implemented a rebranding and an alignment of its brand architecture.
As part of this rebranding, a new Corporate Design will be adopted
worldwide throughout all three divisions by 2015. The Corporation
builds confidence in its products and services with an open and active
communication policy to the customers, employees, media, analysts, and
shareholders.

Corporate values //

Shared corporate values are the basis for overall sustainable
development and are becoming increasingly important with the spread of
globalization. The Corporate center conveys and promotes the
fundamental corporate values throughout the company, thereby nurturing
and fostering its corporate culture.

Corporate Governance //

For detailed information about the Corporate Governance of GF see
pages 42 to 51.

Related topic

Service

Sustainability

Service

Corporate Governance

The Board of Directors and the Executive Committee of GF attach great
importance to good Corporate Governance in the interest of
shareholders, customers, business partners, and employees. The
implementation and ongoing improvement of the generally accepted
principles of Corporate Governance ensure the necessary transparency
to enable investors to judge the quality of the Corporation. This
Report provides information on structures and processes, areas of
responsibility and decision-making procedures, control mechanisms, as
well as the rights and obligations of the various stakeholders.

Contents //

The present publication fulfills all obligations of the relevant SIX
Swiss Exchange directive on information relating to Corporate
Governance in terms of content and order and is based on the Swiss
Code of Best Practice for Corporate Governance of Economiesuisse, the
Swiss Business Federation. The Compensation Report is presented in a
separate chapter on pages 52 to 61. All data and information apply to
the cutoff date of 31 December 2014, unless otherwise noted. Any
changes occurring before the copy deadline on 13 February 2015 are
listed at the end of this chapter. Any changes occurring after the
copy deadline can be found on our website. GF also publishes the
Articles of Association of Georg Fischer Ltd, the internal
Organization and Business Rules, its policies, and much more
information online Corporate Governance - Policies.

Related topics on georgfischer.com

Compensation Report

Introduction by the Chairman of the Compensation Committee

On behalf of the Board of
Directors of GF and of the Compensation Committee, I am
pleased to present the 2014 Compensation Report.

2014 has been a good year for
GF; due to improved productivity, profitability was
increased. All divisions achieved a ROIC well above their
financial costs.

From a compensation perspective,
the Committee has prepared the amendments to the Articles of
Association relative to the requirements of the new Ordinance
against excessive pay. These amendments will be submitted to
shareholders’ vote at the upcoming Annual Shareholders’ Meeting
in parallel to the binding shareholders’ vote on the
compensation amounts of the Board of Directors and the Executive
Committee. Further, the Compensation Committee has undertaken a
thorough review of the compensation model of the Board of
Directors, considering that it has been in place for several
years. Based on this review we will simplify the remuneration
structure of the Board of Directors in 2015.

At the upcoming Annual
Shareholders’ Meeting, we will ask you to approve the
principles of compensation, included in the Articles of
Association as well as to approve prospectively in a binding
vote the maximum amounts of compensation for the Board of
Directors and for the Executive Committee. In addition, we
will also ask you to vote on a consultative basis on the
Compensation Report 2014.

Looking ahead, the Committee
will continue to review and fine-tune the compensation
programs, in order to ensure that they remain aligned with
market levels and the business strategy of GF as well as the
long-term interests of our shareholders, while being compliant
with the various regulations.

We would like to thank you for
sharing your views on compensation with us and we trust that
you will ind this report interesting and informative.

Sincerely

Ulrich Graf, Chairman of the Compensation Committee

Contents //

The Compensation Report provides information about the compensation
policy, the compensation programs, and the process of determination of
compensation applicable to the Board of Directors and to the Executive
Committee of GF. It also includes details on the compensation payments
related to 2014. This report is written in accordance to the Ordinance
against excessive pay in stock exchange listed companies, the
standards related to information on Corporate Governance issued by the
SIX Swiss Exchange and the principles of the Swiss Code of Best
Practice for Corporate Governance of Economiesuisse.

Compensation policy

Overarching principles //

For the Board of Directors, the compensation policy is designed to
ensure their independence in exercising their supervisory duties and
foresees a fixed compensation only.

For the Executive Committee, the compensation policy is
designed to attract, retain, and motivate talented individuals,
along the following principles:

Fairness and transparency

Pay for performance

Long-term orientation and alignment to shareholders’ interest

Market competitiveness

For more information about compensation priciples see page
53 of the Business Report 2014.

Compensation Governance

Compensation Committee //

The Compensation Committee consists of three non-executive Board
members who are elected yearly and individually by the Annual
Shareholders’ Meeting for a one-year period until the next Annual
Shareholders’ Meeting. At the 2014 Annual General Meeting, Ulrich Graf
(Chairman), Isabelle Welton and Zhiqiang Zhang were confirmed as
members of the Compensation Committee. The Committee supports the
highest corporate level and regularly reviews the guidelines governing
compensation of the executives. The Committee also proposes the amount
of compensation to be paid to the Board of Directors, to the CEO and
to the other members of the Executive Committee and prepares the
related motions for the Annual Shareholders’ Meeting.

The Compensation Committee
convenes as often as necessary, but at least once a
year. In 2014, the Committee held three meetings of
approximately one hour and a half each:

In the February meeting,
the Committee evaluated the business performance
in the previous business year against the pre-set
objectives, and prepared a proposal to the Board of
Directors on the short-term incentive to be paid to the
Chief Executive Officer and to the Executive
Committee members. In the same meeting, the Committee
determined the business objectives for the 2014 business
year for the Chief Executive Officer and reviewed those of
the Executive Committee members, before submitting them
to the Board of Directors for approval;

In the September meeting, the Committee reviewed the overall
compensation policy and discussed a new compensation model for
the Board of Directors. The Compensation Committee also reviewed
the benchmarking analysis of the compensation of the members of
the Executive Committee. Further, the Committee reviewed the
proposed provisions on compensation to be included in the
Articles of Associations in order to comply with the
requirements of the Ordinance against excessive pay in stock
exchange listed companies;

In the December meeting, the Committee reviewed and approved
the target compensation for the following business year for the
members of the Executive Committee based on a proposal from the
CEO. The Committee determined the target compensation of the CEO
for the next business year based on a proposal from the Chairman
of the Board and prepared a proposal to submit to the Board of
Directors for approval. The Committee also approved the new
compensation model for the Board of Directors for the next
business year. Further, the Committee determined the
compensation amounts of the Board of Directors and of the Executive
Committee to be submitted to shareholders’ vote at the 2015 Annual
Shareholders’ Meeting. Finally, the Committee reviewed and approved
the Compensation Report.

In 2014, with one exception, all Committee members attended all
meetings. The CEO and the Head of Corporate Human Resources attended
the Committee meetings in advisory capacity. The CEO did not attend
the meeting when his own compensation or performance was discussed.
The Chairman of the Committee reported to the Board of Directors after
each meeting on the activities of the Committee. The minutes of the
Committee meetings are available to all members of the Board of Directors.

On behalf of the Board of Directors, Internal Auditing
annually reviews the compliance of the compensation decisions made
with the compensation regulations for the Executive Committee and
the Board of Directors, the Organizational Rules and the Articles of Association.

The Committee may call in external compensation specialists
to obtain independent advice and/or to get benchmarking compensation
data. In the year under review, the Compensation Committee mandated
Hay Group to conduct a benchmarking analysis on both the compensation
of the Board of Directors and of the Executive Committee.

For more information on Meeting Schedules and Levels of
Authority please see page 54 of the Business Report 2014.

Method of determination of compensation //

The elements and levels of the compensation of the Board of Directors
and the Executive Committee are reviewed regularly and are tailored to
the relevant sector and labor market in which GF competes for talent.
For the purpose of comparison, the Compensation Committee relies on
compensation surveys published by independent consulting firms and on
publicly available information, such as compensation disclosures from
comparable companies. Comparable companies are defined as companies
with similar size in terms of market capitalization, sales, number of
employees, and geographic scope, which operate in similar business
segments and are headquartered in Switzerland.

In 2014, a thorough review of the
compensation of the Board of Directors has been conducted by
Hay Group in order to assess its competitiveness in terms of
level and structure. A peer group of selected companies, all
Swiss multinational companies of the industry sector listed on
the Swiss stock exchange (SIX), has been defined. The peer
group consists of Autoneum, Bucher Industries, Dätwyler,
Geberit, Kaba, Oerlikon, Rieter, SGS, Sika, Sonova, and Sulzer.
On the basis of this benchmarking analysis, the compensation
model and levels for the Board of Directors have been adjusted,
effective for 2015. Those changes are explained in more detail
in the section “Changes to compensation model in 2015”.

In 2014, a benchmarking analysis of
the compensation levels for the Executive Committee has been
conducted by Hay Group on the basis of the Hay Group job
evaluation methodology and the related compensation data. For
the CEO, an additional benchmark has been done on the basis of
the compensation disclosure of the companies of the peer group
described above.

The Compensation Committee also
takes into consideration the effective business and individual
performance while determining the compensation amounts to be
paid to the Chief Executive Officer and to the other members of
the Executive Committee. Individual performance is assessed
through the annual Management By Objectives (MBO) process, where
individual objectives are defined at the beginning of the year
and the achievement against those objectives is evaluated at the
end of the year. The objective setting and the performance
assessment of the members of Executive Committee are conducted by
the CEO and are approved by the Chairman of the Board. The
Chairman of the Board determines the objectives and evaluates the
performance of the CEO.

Architecture of compensation

Compensation of the Board of Directors //

The compensation regulation applicable to the Board of Directors is
reviewed periodically based on competitive market practice and retains
its validity for several years.

In order to guarantee the independence of the members of the
Board of Directors in executing their supervisory duties, their
compensation is fixed and does not contain any performance-related
component. The annual overall compensation for each member of the
Board of Directors depends on the responsibilities carried out and
the time effectively spent in the year under review. The
compensation is partially delivered in cash (fee) and in restricted shares.

(For Compensation Models see page 56)

Members of the Board receive a fixed fee and additional fees
for special tasks such as committee chairmanship, vice-chairmanship
or membership, and any other extraordinary activities/meetings. The
fees are paid in cash in January for the previous calendar year.

In addition, each member of the Board receives a fixed number
of Georg Fischer shares. The value of the share-related compensation
is calculated on the basis of the closing share price on the last
trading day of the reporting year. Those shares are granted in
January for the previous calendar year and are restricted for a
period of five years.

Finally, members of the Board also receive a lump-sum allowance
to cover their business expenses. They do not receive additional
reimbursements of business expense beyond actual expenditures for
business travel.

The compensation of the Board of Directors is subject to
regular social security contributions and is not pensionable. This
compensation model has been modified on the basis of the review
conducted in 2014.

The new compensation model is explained in the section “Changes
to the compensation model in 2015” and is effective for 2015.

Compensation of the Executive Committee //

The principles of compensation of Executive Committee members, as
described above in the section “Principles of compensation”, are set
out in a regulation and retain their validity for several years. They
were last reviewed by the Compensation Committee in 2012.

The compensation of the Executive Committee includes the
following elements:

Fixed base salary in cash

Performance-related short-term incentive in cash

Share-based remuneration (long-term incentive)

Benefits such as pension and social insurance funds

For further information on Compensation Models see page 57
in the Business Report 2014.

Fixed base salary //

The fixed base salary is determined primarily on the basis of the
following factors:

Scope and complexity of
the role, as well as the skills required
to perform the role;

Skills, experience and performance of the individual in the
role;

External market value of the role.

Fixed base salaries of the
Executive Committee members are reviewed every year on the
basis of those factors and adjustments are made according to
market developments and to the company’s affordability.

Short term incentive //

The short-term incentive is a variable incentive designed to reward
the achievement of business objectives of the Corporation and its
divisions, as well as the fulfillment of individual performance
objectives as defined within the MBO process, over a time horizon of
one year.

The business objectives are set by the Board of Directors in
accordance with the long-term strategy. They include absolute
financial figures and are set for a period of several years in order
to ensure sustainable and long-term performance. Currently, the
business objectives are: organic sales growth (excluding acquisitions
and divestures), EBIT margin (EBIT in relation to sales), Return on
Invested Capital (ROIC), and asset turnover (sales in relation to
average net operating assets). For each objective, the Board of
Directors sets a threshold level of achievement under which there is
no payout, and a ceiling above which the payout is capped. The payout
factor for achievement levels between the threshold and the ceiling is
calculated by linear interpolation. While the thresholds and the
ceilings are valid for a period of several years, the achievement
against those is measured on a yearly basis and leads to a payout
factor for this portion of the variable incentive. The threshold for
the ROIC is set on a level clearly over the average cost of capital of
the Corporation.

The individual objectives are set within the MBO process at the
beginning of the year. They are clearly measurable. At the end of the
year, the achievement against each individual objective is assessed
and leads to a payout factor for this portion of the variable
short-term incentive.

For more information on the weighting of the business and
individual objectives please see page 58 of the Business Report 2014.

The maximum short-term incentive is expressed as a percentage
of the annual fixed base salary and amounts to 110% for the CEO
and 90% for the other members of the Executive Committee. The
expected level of performance (fulfillment of the multi-year
business objectives and of the individual objectives) corresponds
to a short-term incentive payout of approximately 60% of the
maximum short-term incentive.

Share-based remuneration (long-term incentive) //

The purpose of the share-based remuneration is to align the interest
of the Executive Committee with the shareholders’ interests. The CEO
receives 850 restricted shares and each of the other Executive
Committee members receives 300 restricted shares. The shares are
granted in January of the following year and are subject to a blocking
period of five years. The grant value of the share is based on the
closing share price on the last trading day of the reported business
year. The shares are automatically unblocked in case of termination,
liquidation, or change of control.

The underlying shares of
the share-based compensation program are either treasury
shares or are repurchased on the market.

Benefits //

Benefits consist primarily of retirement and insurance plans that are
designed to provide reasonable retirement remuneration as well as a
reasonable level of protection against risks such as death and
disability. All members of the Executive Committee have a Swiss
employment contract and participate in the pension fund of GF offered
to all Swiss-based employees, in which the fixed base salary is
insured. The pension fund exceeds the legal requirement of the Swiss
Federal Law on Occupational Retirement, Survivors and Disability
Pension Plans (BVG) and is in line with commensurate market practice.
For top-management positions, including the members of the Executive
Committee, an early retirement plan is in place. The plan is entirely
inanced by the employer and is administered by a Swiss foundation.
Beneficiaries may opt for early retirement from the age of 60,
provided that they are enrolled with the Swiss Social Security and
have been employed by GF at least for ten years.

Members of the Executive Management
do not receive any special benefits. They are entitled to a
representation lump-sum allowance and to reimbursement of
business expenses in accordance to the expense rules applicable
to all employees at management levels employed in Switzerland.
The expense regulation has been approved by the relevant
cantonal tax authorities.

Contractual terms //

The contractual agreements with the CEO and the Executive Committee
members foresee a notice period of maximum twelve months. There are no
entitlements to severance payments.

Remuneration for the 2014 business year

Board of Directors //

The members of the Board of Directors received cash compensation of
CHF 850 thousand in the year under review (previous year: CHF 1’041
thousand). In addition, a total of 1’650 Georg Fischer registered
shares with a market value of CHF 1’038 thousand were allocated as
share related compensation. In the previous year, the allocation had
been 1’600 Georg Fischer registered shares, equivalent to a market
value of CHF 1’004 thousand. Together with other benefits, the total
compensation paid to the Board of Directors in the year under review
amounted to CHF 2’034 thousand (previous year: CHF 2’224 thousand).

For detailed information on the disclosure of compensation to
the Board of Directors in accordance with the Ordinance against
excessive pay in Swiss stock exchange listed companies please see
page 59 in the Business Report 2014.

The compensation paid to the Board of Directors for the year
2014 was below that of the previous year due to a lower number of
meetings in 2014, whereas the share value remained at a similar
level.

In the year under review, Mr. Kurt E. Stirnemann,
member of the Board of Directors until the Annual Shareholders’
Meeting of 19 March 2014, was compensated for the time 1 January
through 19 March. Mr. Hubert Achermann, member of the Board of
Directors as from 20 March 2014, was compensated for the time 20
March through 31 December. No further compensation was paid to
former members of the Board of Directors. No compensation was paid
to parties closely related to members of Board of Directors.

Executive Committee //

The members of the Executive Committee received cash, share-related
compensation, social security and pension contributions amounting to
CHF 6.6 million for the year under review (previous year: CHF 6.3
million). 2’050 Georg Fischer registered shares (par value of CHF 1)
with a value of CHF 1’289 thousand, based on a share price of CHF 629
at year end 2014, were allocated to members of the Executive Committee
for the year under review (previous year: 1’750 Georg Fischer
registered shares with a value CHF 1’098 thousand).

Detailed information on the disclosure of compensation to the
Executive Committee in accordance with the Ordinance against excessive
pay in stock exchange listed companies can be found in the Business
Report 2014 on page 60.

Total compensation for the Executive Committee and the CEO and
the other members of the Executive Committee in 2014 was 6% higher
than in 2013. The increase is explained by the following factors:

The number of shares granted has been increased from 750
to 850 shares for the CEO and from 250 to 300 shares for the
other members of the Executive Committee, while the value of the
shares slightly increased from CHF 627.50 in 2013 to CHF 629.00
in 2014.

The short-term incentive related to the financial results of the
Corporation and the divisions and to the individual performance was
of similar level in 2014 compared to 2013. Consequently, the overall
short-term incentive percentage ranges from 49% to 54% of the base
salary for the Executive Committee members and amounts to 63% of the
base salary for the CEO.

The fixed remuneration was slightly adjusted in order to keep
competitive levels that are in line with the market practice of
our industrial sector.

The employer contributions to social security and to company
retirement plans have increased following the adjustments of
fixed remuneration and the increase of number of restricted
shares awarded. A significant portion of the social security
payments of the employer to the Swiss social security system
(CHF 281 thousand) represents a solidarity payment as the
individuals will not get any return or benefit due to these
payments.

In the year under review, no compensation was paid to former
members of the Executive Committee. No compensation was paid to
parties closely related to members of Executive Committee.

Shareholdings of the members of the Board of Directors and of the Executive Committee //

The information on shareholdings of the members of the Board of
Directors and of the Executive Committee is included on page 118 of
the Notes to the Financial Statements of Georg Fischer Ltd.

Loans to members of governing bodies //

Neither Georg Fischer Ltd nor its Corporate Companies granted any
guarantees, loans, advances, or credit facilities to members of the
Board of Directors or the Executive Committee or related parties in
the year under review. As of 31 December 2014, no loans were outstanding.

Change to Board of Directors’ compensation model in 2015

In 2014, a thorough review of the compensation model applicable to
the Board of Directors has been conducted considering that the current
model is in place since 2010. Hay Group was mandated to provide a
benchmarking analysis both on the structure and levels of compensation
compared to a peer group of companies including Autoneum, Bucher
Industries, Dätwyler, Geberit, Kaba, Oerlikon, Rieter, SGS, Sika,
Sonova, and Sulzer. The results of the analysis showed that the
compensation levels at GF are below market practice compared to the
peer group. Further, the compensation structure is more complex than
typical compensation models currently in place within the peer group.
Consequently, it has been decided to streamline the compensation
structure by remunerating gross instead of net, by providing a fixed
fee for committee work instead of per meeting fees, and by
discontinuing the expense lump-sum; actual expenditures will be reimbursed.

The new compensation model effective for the compensation
period starting 1 January 2015 can be found on page 61 of the
Business Report 2014.